The new regulations issued by the Department of Constitutional Affairs covering the Regulation of Claims Management Services may have far reaching effects throughout the industry. To understand what these might be, it’s useful to understand what exactly the regulations are, as well as why they’ve been introduced in the first place.
One of the problems which has occurred in the market is the way that companies have started to use a variety of claims which might not be that clear to consumers. For example – many consumers don’t actually understand what “no win no fee” really means. Is there an inherent assumption that if the case is won, then the customer does have to pay a fee? If so – how much might this be? Further to this, consumers might read a “no win no fee” claim and assume that this actually means “no win, no cost” but historically this hasn’t always been the case as sometimes claimants are required to take our insurance in case they should lose the claim which, whilst this doesn’t represent a fee, would be deemed a cost to the consumer.
Conversely – the phrase “100% Compensation” is also used in the market – but then consumers may be wondering that whilst they’re being promised 100% compensation – does this mean that they might have to pay a fee? (which sometimes isn’t the case).

You can visit the National Accident Helpline for further information about No Win No Fee and Compensation Claims.

The legislation is aiming to clear this up by preventing companies from making miss-leading claims. It includes not only restrictions on what companies are allowed to say, but also requires very clear guidelines on what they must say. For example, the phrase “no win no fee” is still permitted for use, but must now be accompanied with further information (they allow the use of an asterisk which refers users to a footnote to do this). This further information must clarify what the advertised claim means, by making any restrictions or qualification clear – using words such as:

“Other costs may be payable”
“Subject to insurance cost”
“Other costs may be payable dependant on circumstances”

The other area which the legislation is designed to improve, is to make it clearer to consumers exactly who they are dealing with. There are actually very few advertisers who are active in the TV market, but this has spurred a large number of copy-cats who are leveraging the brands of the few serious players. In the world of internet advertising, some companies have even been seen claiming that they are the ones from the television, when they’ve never once advertised on TV!
To overcome this, the legislation now requires claims management companies to include on their websites their name, registered office address and their company registration number.

It is hoped that these new laws will help the industry become much clearer for consumers, and be the first step towards removing some of the negative associations which are held about the No Win No fee Claims Management industry.